BARAKAH OFFSHORE PETROLEUM BERHAD 2QFY18 Corporate Presentation 29 - - PowerPoint PPT Presentation

BARAKAH OFFSHORE PETROLEUM BERHAD 2QFY18 Corporate Presentation

29 August 2018

Snapshot of Barakah

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Bloomberg Code – BARAKAH : MK Stock Code - 7251 Share price RM 0.14 (1) Market capitalisation RM 124 million (1)

• No. of shares issued

827 million Listing Main Market Listing Date 6 November 2013

(1) As at 27 August 2018

Main asset

Pipelay barge Kota Laksamana 101

Founded

August 2000

Orderbook

RM1.4 billion (1)

Tenderbook

RM1.5 billion (1)

Integrated oil and gas services provider FY2017 Revenue

RM 310 million

Note: (1) as at 31 July 2018

No of staff

140+ Shariah-compliant stock

Nik Hamdan, Founder 40.1% Samling Energy Sdn Bhd 13.6% Others 46.3%

Shareholding

as at 27 Aug 2018

Our Competencies

INSTALLATION AND CONSTRUCTION SERVICES (“ICS”)

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PIPELINE AND COMMISSIONING SERVICES (“PCS”)

§ Shore approach § Pipeline/riser/submarine cable installation § Pipeline repairs § T&I of offshore structures § De-commissioning of oilfield structures § Underwater services

Offshore Transportation and Installation (“T&I”) Engineering, Procurement, Construction and Commissioning (“EPCC”)

§ Full EPCC of Onshore Gas Transmission Pipeline Construction § Mechanical and Piping Erection for

• nshore process plant

§ Minor Fabrication services § Shutdown Maintenance Services § EPCC of small to medium size process facilities § Pipelaying barge § Derrick lay barge § Accommodation work barge § Work boat § DP vessels

Ship Management and Chartering

§ General maintenance works § Investigation and checks § Hook-up for piping, tie-in and structural members

Topside Major Maintenance (“TMM”) and Hook-up Commissioning (“HUC”)

§ Pre-commissioning and commissioning: cleaning maintenance, gauging & flooding, hydrotesting, dewatering and drying § De-commissioning: Flushing, degassing and flooding, preservation and abandonment

Pipeline Services

EPC/EPCIC Installation of pipeline & facilities Installation & maintenance

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Our Position in O&G Value Chain

Beneficiary of on-going development works

DOWNSTREAM Development UPSTREAM Production Development Exploration Onshore Activities Pipeline & Tie-Ins Onshore Facilities EPCC Construction & Installation Facilities Maintenance & Marine Services Lifetime of a Production Field Platform operations / Production Maintenance & Servicing De-commissioning Exploration stage: 1) Seismic, geophysical 2) Drilling

After oil discovery/FDP approval

Development stage: Engineering & design Offshore infrastructure / fabrication Transport to Offshore & Installation Hook-up & Commissioning Development drilling

Our Clients

Petroleum Arrangement Contractor (PAC) Operators

1. PETRONAS Carigali 2. Conoco Philips 3. Lundin Petroleum 4. JX Nippon 5. Mubadala 6. Ophir Energy 7. HESS 8. Kebabangan Petroleum Operating Company 9. TOTAL E&P

• 10. RHP Mukah
• 11. Enquest Petroleum**
• 12. Sapura Energy
• 13. Repsol
• 14. Exxon Mobil
• 15. Shell
• 16. PEXCO N.V.
• 17. Murphy Oil
• 18. Ophir Production
• 19. PCPP Operating

Company

• 20. Petrofac
• 21. PTTEP
• 22. Coastal Energy**
• 23. Vestigo Petroleum**

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22 PSC Operators 4 RSC Operators * RSC Operator ** Operates both PSC and RSC § Apart from these PAC operators, Petronas Gas Bhd and Petronas Floating LNG 1 (L) Ltd are also major clients in the downstream segment § All PAC operators are potential clients under Umbrella T&I contract

Current involvement Recent involvement

Review of Financial Performance

FY2017 and 2Q FY2018

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592.6 622.6

310.9

FY2015 FY2016 FY2017

Revenue

§ Lower FY2017 revenue on the back

• f less work orders issued as oilfield
• perators tighten opex budget.

§ No revenue derived from pipe lay barge KL101 due to lack of significant offshore installation project in 2017. Ongoing actions: ü Actively bidding for projects following steady recovery in oil price ü Securing more work orders for existing term contracts

FY2017 Revenue

Impacted by slower O&G sector activity

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RM 124.1 m 40% RM 186.8 m 60% FY2017 RM310.9 million RM 135.3 m 22% RM 487.3 m 78% FY2016 RM622.6 million Installation and construction services (“ICS”) Pipeline and commissioning services (“PCS”) § Lower contribution for ICS division by >50% in FY2017 as upstream oilfield services operators to maintain current activities in the brownfield and maintenance segment, with no significant capex increase. § For the next 2 years, Barakah will focus more towards bidding on T&I-related projects and carrying out PCS-related activities, specifically hook-up commissioning services and underwater services.

Segmental Revenue Breakdown

RM 46.8 m 60% RM 31.7 m 40% 1HFY18 RM78.5 million

FY2017 Loss Breakdown

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18.8 14.5

(38) (89) (45) (44)

FY2015 FY2016 FY2017

Net Profit/(Loss)

Fixed overhead cost for KL101 including depreciation, finance cost, maintenance and upkeep. Projects operating loss mainly due to cost overrun at Pengerang Gas Pipeline and RAPID Firewater Pipeline Network, resulted in prolongation cost and cost associated with changing work method. General operating cost KL101 impairment due to drop in market demand

(216.8)

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FYE 31 Dec (RM m) 2QFY18 2QFY17 Y-o-Y Chg % 1QFY18 Q-o-Q Chg % 1HFY18 1HFY17 Y-o-Y Chg % Revenue 59.2 52.6 +12% 19.4 +205% 78.5 129.5

• 39%

Gross loss (9.2) (61.0) +85% 2.0 > -100% (7.2) (44.1) +84% EBITDA (6.2) (73.6) +92% (10.8) +43% (17.1) (66.5) +74% Loss before tax (15.3) (81.9) +81% (19.8) +23% (35.4) (86.7) +59% Net loss (15.5) (82.1) +81% (19.9) +22% (35.4) (86.7) +59%

Improving financial performance on the back of effective cost savings measures

2QFY18 and 1HFY18 Financials

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1 2QFY18 revenue increased on the back of ongoing projects in the PCS segment. 2 Lower revenue for 1HFY18 due to exceptionally low roll-outs of work orders by major

• il and gas players in 1QFY18.

4 Net loss for 2QFY18 and 1HFY18 narrowed on the back of the Group’s ongoing cost rationalisation efforts.

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3 Gross loss for 2QFY18 mainly due to a provision for variation order work claim of RM13.3 million in respect of a completed project.

Resilient Financial Position

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FYE Dec/ RM million FY16

(audited)

FY17

(audited)

1H FY18

(unaudited) Non current assets 400.7 297.4 282.6 Current assets 418.5 254.0 218.2 Total Assets 819.2 551.4 500.8 Total equity 423.6 203.2 160.8 Non-current liabilities 170.0 171.3 170.4 Current liabilities 225.6 176.9 169.6 Total liabilities 395.6 348.2 340.0 Total Equity & Liabilities 819.2 551.4 500.8 Cash balances (RM million) 220.5 132.1 107.5 Total borrowings (RM million) 256.6 225.4 218.6 Net assets/share (RM) 0.51 0.25 0.20 Net gearing 0.09x 0.46x 0.69x § Lower borrowings mainly due to:

• Lesser utilisation of working

capital trade finance facilities. § Increased net gearing due to lower shareholders’ funds § Recorded impairment of pipelay barge of RM44 million in FY2017. § Principal payment for pipelay barge loan will only commence in FY2019, contributing to better future cash flow. § Reduced cash balances mainly due to:

• Operations as Barakah

incurred operational loss

• Financing cost - mostly for

pipelay barge loan

Reducing overhead costs and conserving cash flow

Future Outlook

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§ Oil price picking up on the back of

• utput cut of 1.8 million barrels per day

by OPEC and non-OPEC members and geopolitical tensions. § Oilfield operators cautiously optimistic

• n sustainability of oil price movement

trend. § Sustainable oil price recovery encouraging oilfield operators to potentially increase capital spending and production, benefiting Barakah. § More market surveys and bidding activities initiated by oilfield operators.

(USD per barrel) 7-month average Jan-17 to Jul-17 USD52.2/bbl 7-month average Jan-18 to Jul-18 USD71.4/bbl

Brent crude oil price

O&G Industry Steady Recovery

Barakah to benefit from more work coming on stream

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Source : Petronas Activity Outlook 2018-2020

MCM outlook to remain stable

Increasing number of projects and ageing facilities

2018

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2017

ü Bade for more than 20 project packages §

• Est. value: RM1.5 billion

ü Work orders secured (Jan – Aug 2018) worth RM175 million ü Awarded 2 contracts for provision of Pan- Malaysia MCM services under Package A § Client:

• Enquest Petroleum Production

Malaysia Ltd

• Sapura Exploration and Production

(PM) Inc. § Duration: 2018 to 2023 ü Expect to secure more MCM contracts moving forward ü Awarded contract for provision of basic and detailed engineering, procurement, construction and commissioning package § Project: Rejuvenation of Urea Ship Loading Facilities Project at Asean Bintulu Fetilzer Plant in Sarawak §

• Est. value: RM35 million

§ Duration: 2017 to 2019 ü Awarded contract for provision of Well Intervention vessel, support vessel and services for: § Abandonment and Decommissioning of Chinguetti and Banda Field, Mauritania §

• Est. value: USD14.3 million

Recent contracts secured

Replenishing orderbook

Orderbook as at 31 July 2018

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Projects Clients Outstanding Timing Hook-up & Commissioning (“HUC”) and Topside Maintenance for platforms in West and East Malaysia 2015 – 2018 § Various PSC’s RM3.0 million 2018 Sabah-Sarawak Gas Pipeline Maintenance § Petronas Carigali Sdn Bhd § Petronas Gas Berhad RM115.0 million 2018 Pipeline Services § Petronas Carigali Sdn Bhd § Shell RM14.0 million 2018 Pan Malaysia Maintenance, Construction and Modifications (“MCM”) of offshore facilities 2018 – 2023 Various PSC’s RM1,200.0 million (managment estimate) 2018 - 2023 Umbrella Transportation & Installation (“T&I”) 2017 – 2019 Various PSC’s RM11.7 million 2019 Underwater Inspection Repair & Maintenance (“IRM”) 2016 - 2018 Petronas Carigali Sdn Bhd RM37.4 million 2018 Engineering, Procurement, Construction and Commissioning (“EPCC”) of material handling system at Bintulu ABF ASEAN Bintulu Fertilizer Sdn Bhd RM26.3 million 2019

RM1.4 billion Total O/S orderbook

Pipeline and commissioning services Installation and construction services

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Key projects

Improving earnings visibility

Note MCM – Maintenance, construction and modification

2018 2019 2020 2021 2022

Pipeline and commissioning services Installation and construction services Sabah-Sarawak Gas Pipeline maintenance

O/S balance: RM115 million

HUC and TMM for platforms In West and East Malaysia 2015 - 2018

O/S balance: RM3 million

EPCC services for Asean Bintulu Fertilizer Plant

O/S balance: RM26.3 million

Underwater Inspection, Repair & Maintenance 2016 – 2018

O/S balance: RM37.4 million

Pipeline services

O/S balance: RM14 million

Pan Malaysia MCM services for Enquest Petroleum Production Malaysia Ltd Pan Malaysia MCM services for Sapura Exploration and Production Inc Umbrella Transportation & Installation 2017 - 2019

O/S balance: RM11.7 million

2023

Pan Malaysia MCM services for other clients

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Addressing going concern matters

Our immediate action plan to strengthen Barakah’s financial position and competitiveness

Sustaining Barakah

Collaborate with stronger companies § Heighten probability of contract wins § Spread execution risk among project delivery partners. Cost rationalisation measures § Full or partial disposal of KL101 § Reduced headcount by 70% since Dec-15 § Lower general admin cost by 50% from FY2015 to FY2017

Dec-15 May-18 469 staff 142 staff FY2015 RM64.8 m FY2016 RM40.6 m FY2017 RM32.7 m

Focus on active bidding and winning tenders for contracts: § More than 20 project packages with

• est. value of RM1.5 billion

§ Mainly T&I services § 90% domestic, 10% international Strengthen internal project management capabilities § Close monitoring of subcontractors for timely project completion § Enhance project efficiencies Execution of projects to sustain operations: § RM175 million worth of work orders already secured from Jan-18 to Aug-18 § Orderbook of RM1.4 billion as at 31 July 2018 Improving cash flow management § Exploring fund-raising exercises in equity market § Terming of payment obligations to creditors and bank

Long-term Intermediate Immediate

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§ Focus on winning tenders § Supply chain and cost

• ptimisation efforts

§ Improving project management § Collaborate with stronger companies § Expansion into downstream business § Diversify into niche technology driven services within the O&G industry § Build recurring income business § Move up the value chain for more control of revenue source

Moving Forward

Positioning for long-term value creation

Thank You